Making Tax Digital MTD UK 2026: The Complete Overview
Everything UK businesses and self-employed individuals need to know about Making Tax Digital in 2026, including deadlines, requirements, and how to prepare.
Making Tax Digital UK 2026: What Every Business Owner Needs to Know
Making Tax Digital (MTD) is the UK government’s long-term programme to modernise the tax system. By requiring businesses and individuals to keep digital records and submit tax information electronically, HMRC aims to reduce the tax gap — the difference between tax owed and tax collected — and make tax administration more efficient for everyone.
2026 marks a major milestone in this programme, with MTD for Income Tax Self Assessment (ITSA) becoming mandatory for the first wave of self-employed individuals and landlords.
A Brief History of MTD
MTD began with VAT. Since April 2022, all VAT-registered businesses — regardless of turnover — have been required to use MTD-compatible software for their VAT affairs. This affected approximately 1.1 million businesses.
Now HMRC is extending the same approach to Income Tax. The schedule is:
| Date | Who Must Comply |
|---|---|
| April 2026 | Self-employed and landlords with qualifying income over £50,000 |
| April 2027 | Those with qualifying income over £30,000 |
| April 2028 | Those with qualifying income over £20,000 (proposed) |
How MTD for Income Tax Works
Under the new system, the traditional annual Self Assessment tax return is replaced by a more frequent reporting structure:
Quarterly Updates
Four times a year, you submit a summary of your business income and expenses to HMRC. These are not final tax calculations — they are updates that help HMRC build a picture of your financial year as it progresses. You have one month after each quarter ends to submit.
End-of-Period Statement (EOPS)
At the end of the tax year, you submit an EOPS confirming that your quarterly updates are accurate and adding any additional allowances or adjustments.
Final Declaration
This replaces the Self Assessment return. You confirm your total income from all sources and finalise your tax position for the year.
What Digital Records Must You Keep?
Under MTD, your records must be maintained in a digital format. This means recording:
- All business income (each transaction individually)
- All allowable business expenses (categorised correctly)
- Any property rental income and associated expenses
Spreadsheets can be used, but only with bridging software that connects them to HMRC’s API. Using a dedicated MTD-compatible app is generally simpler and more reliable.
The Benefits of Going Digital
Beyond compliance, switching to digital record-keeping offers genuine business advantages:
Better cash flow visibility: When you can see your income and expenses in real time, you can make better decisions about spending, pricing, and investment.
Fewer errors: Manual re-entry of data between paper records and tax returns is a major source of mistakes. Digital records reduce this risk significantly.
Less year-end stress: When your records are up to date throughout the year, there is no mad rush in January to gather receipts and statements.
Faster tax refunds: Accurate, timely submissions mean HMRC can process your return more quickly.
Common Questions About MTD 2026
Do I need to submit quarterly even if I have no income in a quarter? Yes. You must submit a nil return for any quarter in which you have no reportable activity.
What happens if I miss a deadline? HMRC’s points-based penalty system applies. You accumulate penalty points for late submissions, and once you reach a threshold, a financial penalty is charged.
Can my accountant submit on my behalf? Yes. You can authorise an agent to submit on your behalf, but you remain responsible for the accuracy of the underlying records.
What if my income fluctuates around the threshold? You are assessed on your income in the previous tax year. If your income drops below the threshold, you may be able to apply for an exemption.
How to Prepare Now
- Review your income: Determine whether you will be caught by the April 2026 threshold
- Choose compatible software: Select an HMRC-recognised app or software solution
- Start keeping digital records: Begin now, even if your mandatory start date is in the future
- Speak to your accountant: If you use one, discuss how the new system will affect your working relationship
- Understand the quarterly cycle: Map out your submission dates for the coming year
Making Tax Digital is a permanent change to how UK tax works. The businesses that embrace it early will be better prepared — and less stressed — when the deadlines arrive. Tools like InvoiceGuru make the transition seamless, combining digital record-keeping, invoicing, and MTD compliance in a single mobile app designed for UK sole traders.